Late Fees During the Pandemic: What YOU Need to Know
November 18, 2020
The COVID-19 pandemic has obviously affected every single aspect of life as we know it, so it stands to reason that there would be an impact on property management. While our Advocacy team is doing a great job of keeping you up to date on the latest developments in eviction law, we also wanted to make sure that you are aware of the current laws regarding late fees. As you probably know, the General Assembly passed a bill this spring that capped all late fees at the lesser of 10% of the periodic rent or 10% of the outstanding balance owed by the tenant. As an example, if the monthly rent for an apartment is $1,200 and the tenant missed payment for two months, he can be charged a maximum of $240 in late fees ($120 for each month that is late). If, however, that same tenant had only been short $500 for one month, the most he could be charged as a late fee is $50. This law also required that late fees be specified in the lease.
But we’ve had several questions on the Legal Hotline about whether property managers can charge late fees at all during the pandemic. The CARES Act, passed by Congress this Spring to help address a wide range of pandemic-related issues, prohibited landlords from charging late fees on “covered” properties, meaning those with federally-backed mortgages. That is still the case, so if the property is a covered property then you may not charge late fees. Additionally, under the new legislation that was signed into law on Monday, November 9, during the declared state of emergency related to the pandemic, owners who own five or more residential rental units in Virginia also may not charge late fees. For any other property, you may now charge late fees (as long as they are laid out in the lease and don’t exceed the cap).
For a lot more information about the current state of property management and COVID-19, check out our COVID-19 resource page at https://virginiarealtors.org/coronavirus. For more specifics regarding the budget and special session bill language that changed the eviction process in Virginia, you can review our update here: https://virginiarealtors.org/2020/11/12/va-general-assembly-and-governor-approve-new-covid-19-legislation/.
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